coming out of a recession stronger

As more and more states and communities begin to open up in the wake of COVID-19 restrictions, the stark reality is that many businesses might never be the same. Also, even if restrictions have been lifted, will the customers come back? For months businesses have tried to survive in any way they can to keep their doors open, biding their time for the easing of restrictions. But the data shows that even in countries like Sweden where there weren’t widespread restrictions, business has fallen off.

However, we can look back on previous recessions to find the strategies used by companies to not only survive but thrive. In fact, a Harvard Business Review study found some companies actually thrived from the 2007 global recession. Of course, the question is, how did they do it?

17% of companies didn’t survive a recession

The headlines, even locally in southeastern Wisconsin, have been stark. Many businesses simply can’t survive a recession. In our hometown of Elkhorn, Wisconsin, a bakery with 63 years of operating was “Crushed by the COVID”. This hometown business which catered to restaurants and events was simply decimated by the shutdown. Given Elkhorn’s position among vacation communities, the results are understandable.

Harvard Business Review (HBR) found that 80% of businesses had not yet regained their pre-rececession growth rates for sales and profits despite being three years out from the 2007 recession. That number is surely starting, but the findings are not without hope.

flourishing after a slowdown

HBR found that 9% of companies managed to thrive in the wake of the 2007 recession. One might dismiss these figures as related to businesses that stand to benefit out of the situation. This type of speculation wouldn’t be without merit as figures recently released by Walmart indicate a 10% growth over last year because of their ability to logistically handle the pandemic.

Most businesses though don’t have the ability to pivot to a product or service that might benefit in such a pandemic. Instead, they need to look within at what they can do. HBR outlines four different responses most companies have: defensive, offensive, pragmatic, and progressive. Their research found it is the progressive response that had the best results after a recession.

the opportunity to pause and reflect

This “progressive” approach has two main factors, selective defensive measures coupled with comprehensive offensive ones. In the defensive approach companies seek to reduce expenses, usually by reducing their payroll and letting employees go. However, companies which were selectively defensive, sought to leverage efficiency instead and saw the most benefit.

This has certainly been the case now in response to COVID-19. A reduction or elimination of business has given business owners the unique opportunity to look at their internal processes and how they can be more efficient. There’s never a better time to reevaluate workflows and processes when the distractions of business in progress are removed. Consumers have behaved the same way as donations to Goodwill have surged once they opened to donations again. With time on their hands, homeowners could clean out their closets. Business owners can do the same thing.

For instance, prior to COVID-19, few restaurants had invested much in online ordering, delivery, or curbside pickup. In the scramble to find a way to keep their doors open, many restaurants had to quickly adopt these measures. Now, in the wake of COVID-19 they can reflect on the benefits and convenience of these systems even as their businesses may now reopen. Facebook recently said the experience has taught them the benefit of allowing employees to work from home and the company is now pursuing a path where half of their employees will work from home.

marketing your way out of a recession

The other half of the progressive approach is comprehensive offensive moves. HBR’s study found the companies that succeeded out of a recession did so by increasing spending in marketing and R&D. At wtg we talk to our clients all the time about marketing being a marathon and not a sprint and the same applies coming out of a recession. As HBR found, spending on marketing out of the gates may be of limited initial benefit but can translate into long-term success.

Businesses now coming out of lockdown are discovering the challenge of communicating with their customers but it’s not just enough to say you are open. As the Sweden example shows, just being open isn’t enough to stave off a decline in businesses. Many businesses in Sweden saw a decline of 30% or more despite being open. This is where judicious use of marketing comes into play.

Now, more than ever, businesses need to convey to customers what they’re doing to keep their customers as well as their employees safe. Many were jarred by the headlines of packed Wisconsin bars after restrictions were lifted. While there may be many customers anxious to get back to normal and return to businesses there will be scores more confronting the anxiety of our new reality of life with COVID-19.

marketing is communication

All of this boils down to one of our foundational principles at wtg – marketing to your current and future customers is all about communicating with them. Now is the perfect time to put out messages tailored to your customers to address their concerns and let them know you are back to business. In order to be part of that 9% who are successful out of a recession it’s important to bring that marketing focus back.

Whether you’re working with wtg or another agency, now is the time to put your plan together to restart your business. We’d love to work with you on it and would love to hear from you. Each business has a new reality it is facing in the wake of COVID-19, hand-tailoring a strategy to your business to be aggressive with your marketing message where you need to be has proven to be a key to thriving in that new reality.